240th Report on Costs in Civil Litigation - Law Commission of India

compensatory costs as award of such a small sum of Rs.3,000/- would notmake much difference. We are of the view that the ceiling in regard tocompensatory costs should be at least Rs.1,00,000/-.”3.20 It may be noted at this juncture that in the written submissionsmade by the Law Commission before the Court, the Commission suggested theenhancement of ceiling to Rs. 1 lakh and also suggested certain othersupplemental directives that could be appropriately given while awarding costsunder Section 35A. We shall advert to those details hereinafter.3.21 The other important observations of the Supreme Court vis-à-visSection 35A are at paragraph 15:15. We may also note that the description of the costs awardable underSection 35A “as compensatory costs” gives an indication that it isrestitutive rather than punitive. The costs awarded for false or vexatiousclaims should be punitive and not merely compensatory. In fact,compensatory costs is something that is contemplated in Section 35B andSection 35 itself. Therefore, the Legislature may consider award of'punitive costs' under section 35A.3.22 Another recent case in which certain principles relating to awardof costs have been laid down by the Supreme Court is that of RamrameshwariDevi vs. Nirmala Devi 12 .The relevant observations of the Supreme Court aregiven below:52 C. Imposition of actual, realistic or proper costs and or orderingprosecution would go a long way in controlling the tendency ofintroducing false pleadings and forged and fabricated documents by thelitigants. Imposition of heavy costs would also control unnecessaryadjournments by the parties. In appropriate cases the courts mayconsider ordering prosecution otherwise it may not be possible tomaintain purity and sanctity of judicial proceedings.”3.23 This is what the Supreme Court further said in Ramrameswari Devi’s case:12(2011) 8 SCC 24921